Successful Sexy Succession

At the start of the 5th Scottish Parliament, there is an air of a new start for the 9-year-old SNP administration. Reforming the Scottish Education system (with an increase in the school age being suggested by some) and re-shaping the NHS in Scotland with mental health provision becoming a more integral part of the service. These are big, important policy areas. They graces pages and pages of the various parties’ manifestos over the Spring. They are sexy law.

New nurses are sexy. More teachers is sexy. You can have big debates about class sizes and waiting times and what they are or should be. Police numbers and how big thir guns are are sexy. People know what these areas are. We have all, more-or-less, come into contact with them all at some point. They have grand theories about them. There are entire professions dedicated to the School, Police and Health services across the world. They educate people; they protect people; the make people better. The people are sexy – so the system is sexy – so the political and legal debate is sexy.

Dead People are not sexy. Succession is not sexy at all.

If you were to die tomorrow…what would happen. This isn’t some spiritual examination, I talk much more materially. Your money, your house, your stuff…where does it go? It as been a constant source of worry and amazement to me just how few people know the answer to this question. But then I think about it – and I understand why.

Say, Mr Person, you died tomorrow with the convenient (post-IHT) sum of £250,000 in your Bank Account, a house worth £500,000 and £29,000 of furniture in that house. Quite a specific value of furniture you may think, but bear with me. Who gets it, furniture et al? Your spouse? Your kids? If only you’d gotten round to writing that will…but you never did.

Well, it depends. If you are married (or civilly-partnered) then your spouse automatically allows let us consider from the simplest to the most complex:

If you only have kids, then its simple. Your kids (equally among them) will divide the value of the estate between them and that’s that. How they divide it is up to them – but so long as it’s evenly split, then there are no issues.

But, if you have a spouse it’s not as straight forward. You see, ask the ‘reasonable man’ on the street who gets your stuff when you die – 99% of people would say, “your wife/husband”. However, this is not automatically true. There is a list, in the Succession (Scotland) Act 1964 s.2, that tells you the people who get your stuff when you die. You start at the top of your list and, if no-one in that ‘class’ of people exists, you move down. The list is this:

Children

Parents and Siblings

Siblings

Parents

Spouse

Aunts and Uncles

Grandparents

Siblings of Grandparents

Great-Grandparents

Siblings of Great-Grandparents

Great-Great Grandparents

Siblings of Great-Grea…etc etc…turtles all the way up.

So really – your Spouse isn’t even a factor in this list until you have no children, siblings or parents. Would you have guessed that? Chances are, probably not. Children, maybe, but parents? Siblings? Parents and siblings? But even then IT’S STILL NOT OVER!

Because your spouse does rights to your estate, prior rights. Literally, they are called Prior Rights. Before we get to the List of Succession, your spouse is entitled – but by no means compelled – to a certain value of your estate. They are entitled to:

your interest (usually ownership) in your dwelling house (if they lived in it with you) if it is worth £473,000 or less. If it is worth more, the financial equivalent of £473,000.

£29,000 worth of furniture and plenishings in one house – and only that house.

They also have a further financial claim on the estate, but that depends on whether you have children or not:

If there are children, they can claim £50,000.

If there are no children £89,000.

So…where are we now:

Your house is worth more than £473,000, so that means it doesn’t automatically pass to your spouse. Instead, they would gather a financial claim instead.

Even though they can’t get the house, they can still get the £29,000 furniture – so that’s that simple.

Finally, they get the £89,000 since you have no kids.

So, in the end, there’s a £562,000 financial claim and £29,000 furniture to the spouse and a £89,000 financial claim. Simple right…

…NO! Because see that Financial claim at the end…that’s not just cold hard cash. that claim is divided, proportionately, between the heritable (houses and land) and moveable (everything else) property in the Estate. So – in this case – that means 53.8% (£47,901) comes form the house and 46.2% (£41,099) from the bank account.
So when you add all that together, your wife can claim a total of £520,901 against the movable estate (so can take the house after all) and then can claim a total of £41,099 cash – and that all important £29,000 furniture.

So with the house spoken for – what about the remaining moveables, money and furniture. We finally get to the list above right. If you have children they get it…but you don’t, so your parents get it…but they’re dead, so your siblings would get it…yes, that means that sister you never loved and haven’t spoken to for years and ruined your wedding. It’s not pleasant, certainly, but it’s at least a conclusion…right…

NO! There is another set of rights that come into play before we get to the list…Legal Rights. They come after Prior Rights – but before the list.

Under Legal rights, your spouse has a further claim to your estate (the jus relicti for your husband and jus relictae for your wife), as do your children (the legitum) if there are any. If you are married, but have no children; or if you have children, but no spouse, then all your children may share in one-half of your moveable Estate. If you have both a surviving spouse and surviving children, then each is entitled to share in 1/3rd of the estate (1/3 to the spouse and 1/3rd among the children)[1]. So where does that leave us:

Well, after the Spouses prior rights have been dealt with, you have £359,001 of moveables (money) left. We’ve said you have no kids. That means we divide that into 2 halves of £179,500.50 each.

1/2 goes to the spouse.

And you have 1/2 left over…

…Which THEN (and only then follows the list)…and ends up in the pocket of that sister that thought your Engagement Party was the best time to announce her divorce.

So…in the end of it all:

Spouse: The House, The furniture, and £220,599.50 of the cash.

The Sister who decided your son’s birth wasn’t as important as her dog’s pedicure: £179,500.50.

Isn’t that wonderful…and it only took us 1,200odd words to get there.

This isn’t an outliner case. This is completely possible. And this scenario could throw up real problems. What if you had 2 kids? That would mean your Spouse could only claim £499,000 against the house – £1,000 short? The rest would pass to the kids, which is fine if you live in a happy family that loves each other. But what if the kids of your first marriage loathe the souse from your second and they don’t play ball…that can lead to difficult and unsavoury conversations.

If only you had written a will. That would solve all the problems…right?

Well, dear reader, as you may have come to expect, the answer is no! Prior Rights wouldn’t apply any more – meaning that your house is yours to deal with as you please – but Legal Rights would still apply, so your kids if you had had any (who, for all I now, might have prompted you to write a will purely to write them out of it) could still share 1/3rd the £500,000 cash and, to make bad news worse, £29,000 worth of furniture.

What I’ve tried to show here is that Succession Law, particularly when someone dies and hasn’t left a will, is messy and confusing. But, more than that, people don’t know what will happen to their belongings after they die. How many people would have guessed that the goldfish-murdering sister would have got any of our stuff when you died? Who would have thought that kids from your first marriage could theoretically own part of your house you and your new beloved bought together. Who actually has a clue what is going on.

Succession Law is not sexy…but it is important and it is a mess. It needs to be reformed and simplified.[2] Lets start at the beginning of this Parliament, so that, maybe, we can figure out what we want by the end.

[1] This fact, that kids who you specifically wrote out of your will could still inherit something anyway prompted him to come up with a scenario in which he would have kids, write them out his will, fall out with them, then, in his later years, re-connect with them and have a few good years together and convince them, when he was on his death-bed, to help him commit suicide so it satisfied the definition of murder – so would then make them dishonourable heirs so they could not inherit – purely so he could find a way to get round this rule.

[2] I am not one of those “something must be done but do not ask me what” types. I once, as a side-project in my 1st Year of my LL.B attempted to re-write the Succession (Scotland) Act. Unfortunately, my efforts have been lost to a corrupted, un-backed-up hard drive.